Pound comes up for air


Pound’s drop takes a breather

The pound held steady versus the US dollar in Asian trading after suffering the worst one-day decline since the day of the Brexit referendum in 2016. Despite the hefty losses yesterday, GBP/USD failed to take out the October low of 1.2697 and is currently 0.13% higher on the day at 1.2790. So far, it is still higher on the month and, while technical studies often take a backseat in times of extreme volatility, it is interesting to note that the FX pair is still sitting above the 61.8% Fibonacci retracement of the rally from October 2016 to April 2018 at 1.2695.

GBP/USD Monthly Chart

Source: OANDA fxTrade

Traders are keeping an eagle eye on the newswires for headlines if UK PM May is to face a vote of no confidence from her party members. They would require 48 members to sign letters to trigger the vote.

Sterling plummets on Brexit resignations

Equities give back gains

Global equities failed to capitalize on the positive close on Wall Street yesterday as, once again, the tech sector retreated following disappointing results from Nvidia Corp. after the bell. Losses were across all markets, with Japanese shares suffering the most, losing 0.71%. The HongKong33 index was close behind with 0.57% while China shares dipped 0.33%. US futures are pointing toward a lower open today, with the US30 index down 0.21% and the NAS100 CFD sliding 0.14%.

Aussie eyes options strike price

AUD/USD is aiming for its third up-week in a row, buoyed by yesterday’s jobs data and hopes of progress in US-China trade talks before the G-20 meeting at the end of the month. AUD/USD is currently trading at 0.7265.

NOTE: More than A$2 billion of AUD/USD options expire today with strike at 0.7225, DTCC data shows

The US dollar was generally steady, though USD/CNH crept 0.08% higher to 6.9343. USD/JPY looks to be heading for its first weekly loss in three weeks as the yen is sought after on safe haven plays.

All is a moot point next to Brexit headline watch

ECB’s Draghi set to speak

It’s a relatively slow data day as we wind down a busy week. A speech from ECB’s Draghi could be the highlight as Euro-zone consumer prices are expected to hold steady in October. CPI is seen rising 2.2% y/y, the same pace as September.

The US calendar sees October industrial production and capacity utilization followed by September’s TIC flows late in the session.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

Have a great weekend from Asia.

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Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

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